Fiscal Deficit and Public Debt in Industrial Countries, 1970-1994

IMF Working Papers, May 1, 1995

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Canonical URL: Fiscal Deficit and Public Debt in Industrial Countries, 1970-1994

Paper assembles fiscal data for individual countries and for the aggregate G-7 and 18 industrial countries covering a period long enough to assess trends and conduct econometric tests.
The “world” fiscal deficit has been rising since the 1970s and reached a historic high in 1993-94.
The rise of the deficit has been accompanied by a significant decline in world saving.
The paper argues that the increase in public debt, which has been the consequence of the accumulation of the fiscal deficits, has pushed up worldwide interest rates.
Econometric evidence supporting this relationship is presented on the basis of panel data for the period 1970-93.

The “world” fiscal deficit: rising since the 1970s; historic high in 1993-94.
World saving: experienced a significant decline concurrent with rising deficits.
Public debt accumulation: presented as the consequence of accumulated fiscal deficits.
Interest rates: increase in public debt has pushed up worldwide interest rates.
Empirical approach: econometric evidence based on panel data for the period 1970-93.

Coverage: individual countries plus aggregate G-7 and 18 industrial countries.
Time span emphasized: 1970-1994 for assembled fiscal data; econometric analysis based on 1970-93 panel data.

Subjects: Expenditure, Financial services, Government debt management, Long term interest rates, National accounts, Private savings, Public debt, Public financial management (PFM), Real interest rates
Keywords: countries GPS, debt coefficient, debt dynamic, deficit, deficit country, G-7, GDP ratio, Global, Government debt management, percentage of GDP, Private savings, Real interest rates, WP